The drastic increase in coronavirus cases in India in the month of March and April has led the country again to lockdown 2.0, Which could adversely affect the demand for residential and commercial property sales in the country. The impact of coronavirus in real estate has affected a lot of the recovery also. with property transaction Deeping nearly zero due to nationwide lockdown the realty sector faced some of the most challenging times ever.
Impact of corona virus on real estate due to lockdown
They were running at a steady pace at the starting of the year but all real estate activities came to a sudden halt in the late march with the lockdown. Although the economy started to recover in June onwards, the situation remains grim through September as construction activities were stalled because of labour shortage.
With no site visits possible during the lockdown, real estate developers and property brokers swiftly adopted digital technologies to launch new projects and market their properties, with a fair amount of success. As a positive, the pandemic accelerated the pace of digital adoption in real estate, which will go a long way in transforming how properties are sold in the country going forward.
Housing affordability seen increasing
As India continues with its Coronavirus vaccination drive, the positive impact of the inoculation programme will also be seen in the country’s real estate segment.
If the improving housing affordability is any cue, India’s residential real estate sector is likely to witness better sales and supply in the January-March period of 2021, the lingering impact of the Coronavirus pandemic on the sector not withstanding.
Amid the RBI continuing to keep the repo rate unchanged at 4%, home buyers can currently get home loans for as low as 6.65% annual interest. This is in contrast with the average home loan interest rate of 8% seen in January 2020. Price growth in the housing segment has also been under pressure in the past one year, due to the impact on demand.
In a report titled ‘India Real Estate Outlook – A new growth cycle’, property brokerage firm JLL India has also indicated that new housing supply in 2021 would continue to be in the affordable and mid-segment, with developers attempting to reap the benefits of strong pent-up demand.
With most rating agencies making an upward revision in India’s growth forecast, the recovery in the country’s housing sector may also be better and earlier than expected.
On March 24, 2021, Fitch Ratings revised India’s growth estimate for fiscal 2021-22 to to 12.8%, from its previous estimate of 11%, saying that ‘a stronger carryover effect, a looser fiscal stance and better virus containment’ have led to the upgrade in growth projection. Many other rating agencies and global think-tanks, including Moody’s Analytics and the Organisation for Economic Co-operation and Development (OECD), have also made upwards revisions in India’s growth forecasts, amid the domestic inoculation programme against the virus picking up pace.
Outlook for Indian real estate in 2021
Even though the pandemic drastically impacted the sector in 2020, better days are expected in 2021. Amid growing importance of home ownership among buyers and investors, the demand for residential real estate would be high in the coming year.
“In these extraordinary times, stakeholders across sectors have an opportunity to structurally re-imagine their strategies, to ensure sustained recovery. Doing so, would require shifting from traditional approaches and embracing new, transformational methods — which would be accelerated by widespread tech adoption, sustained policy impetus and accelerated investor interest in India,” says Anshuman Magazine, chairman and CEO, India, South East Asia, Middle East and Africa, CBRE.